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AT&T Taps Stephenson as CEO
Telecom Landscape Offers Intense Global Challenges; A Loyal Whitacre Aide
By Dionne Searcey and Jessica E. Vascellaro
The Wall Street Journal
Saturday, April 28, 2007

AT&T Inc.'s incoming chairman and chief executive, Randall Stephenson, will inherit a vastly bigger company competing in a more intense telecom landscape than ever before when he takes the reins from longtime Chairman and CEO Edward Whitacre in June.

AT&T said Friday that Mr. Whitacre, who built a small regional phone company into the telecommunications giant it has become, will retire in June after 17 years at the helm.  Mr. Stephenson, 47 years old and a 25-year company veteran, has been chief operating officer.

Like other large telecom players, AT&T will have to navigate new technologies that make communications easier for consumers and seek to bring them to market without cannibalizing traditional revenues too much.

"We're sitting in a very good position right now," Mr. Stephenson said in a phone interview, adding that "Ed has created a very different business than he inherited 17 years ago."

AT&T will turn its attention increasingly abroad as it aims to become the preferred provider of telecommunications services to multinational corporations around the world.  Mr. Stephenson said Friday that, on the international scene, AT&T is going to look for business partners rather than make large acquisitions, though he added that the company may look for small acquisitions around the world to better serve large corporate clients.

And, AT&T today has a slew of new competitors, including Google Inc. and cable companies that in the past two years have aggressively entered the phone business

One of Mr. Stephenson's first challenges will be managing a successful launch of Apple Inc.'s iPhone, which is expected to hit stores in June.  AT&T made several compromises to win the exclusive rights to offer the Apple device through its wireless unit, formerly called Cingular Wireless.

Mr. Stephenson, who once was board chairman of Cingular, is an enthusiastic advocate of his company's wireless business and says wireless will become the cornerstone of its bundled package of mobile phone, landline phone, TV and high-speed Internet services.  As the Internet goes wireless and becomes the vehicle for delivering content across all devices, AT&T will continue to add new features to its mobile phones, for example allowing them to record live video that can be streamed to computers at home.

When Mr. Stephenson started at AT&T in the information-technology department in Oklahoma, the company was known as Southwestern Bell Telephone.  He has spent most of his career overseeing telecom finances in various capacities, and worked in the company's Mexico operation.  In 1996, he was named controller, and also has served as senior vice president for consumer marketing.  As chief financial officer he reduced the company's net debt from $30 billion to nearly zero by 2004, positioning AT&T for future takeovers.

In 2004, he became Mr. Whitacre's top lieutenant, and in recent years was a loyal sidekick as his boss acquired company after company and grew AT&T from a small Baby Bell into a super-sized phone giant.

Mr. Stephenson, who holds a master's degree in accounting from the University of Oklahoma, was a key architect of AT&T's recent acquisition of BellSouth Corp.  He embraces the technology his company peddles using laptops and GSM cards, and is of a different ilk than Mr. Whitacre, who came to AT&T in 1963 as a facility engineer.

Mr. Whitacre, an old-school Texan who hunts quail, wears cowboy boots and never shies from speaking his mind, worked his way up as a manager and weathered the breakup of the Bell system in 1984.  When he became CEO in 1990 he began to work on putting it back together with a string of acquisitions that culminated last December in an $85 billion deal to take over BellSouth and gain full control of the two companies' joint venture, Cingular Wireless.

Mr. Stephenson inherits unique challenges facing phone companies whose very core business -- landline phone service -- is diminishing in the age of wireless and Internet phone calls.  While some phone companies, like Sprint-Nextel Corp. and Verizon Communications Inc., have shed landlines and focused on wireless service, a growth business, AT&T has cherished its landline service.  It is bundling it with wireless and TV offerings and testing devices that will converge the two services.

Mr. Stephenson has big plans for wireless, hoping the company can use the massive appeal of Apple and intense buzz about its new phone to lure new subscribers from competing carriers, adding to its industry leading roster of roughly 62 million wireless customers.  AT&T is making other aggressive moves in wireless.  It's planning to roll out a mobile-broadcast TV service.  After its deal with BellSouth closed, the company said it would pursue a three-screen advertising strategy, selling ads to appear on mobile phones, the Internet and its television service.

Mr. Stephenson will need to continue to build AT&T's high-speed Internet business, which mushroomed under Mr. Whitacre.  As more customers demand higher Web-surfing speeds for music and video downloads, Mr. Stephenson must navigate a political issue of whether Congress will block AT&T and other Internet service providers from charging content companies to deliver their wares faster than others' content.

Mr. Stephenson is optimistic about the company's TV efforts, saying, "TV will be the next multibillion-dollar business for our company."

AT&T shares fell 32 cents, or 0.8%, to $38.64 in 4 p.m. New York Stock Exchange composite trading.

--Peter Grant and Amol Sharma contributed to this article.

Write to Dionne Searcey at dionne.searcey@wsj.com and Jessica E. Vascellaro at jessica.vascellaro@wsj.com

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